Economics: Absence of democratic process in China has given rise to unsustainable programme of urbanisation.
One of globalisation's proudest boasts is that it will herald a new era of global democracy. That claim - as well as the relationship between economic and political freedom generally - deserves a profound reassessment following a development in Hong Kong this week. Anson Chan - one of Hong Kong's most popular figures - announced that she would not be contesting next year's election for the region's highest political post of chief executive officer. Hong Kong is not a country of its own right, but a Special Administration Region (SAR). Before the colonial era came to an end in 1997, Hong Kong had a governor who wore a silly hat with an ostrich feather in it. Appropriately for such a bastion of capitalism, it now has a chief executive.
Under Hong Kong's Basic Law - its constitution - the method for electing this position is supposed "eventually" to be based on universal suffrage. At present, the post is elected by a college of 800 electors, comprising business, religious, social and trade union representatives.
These are the major stakeholders of Hong Kong's economy and society, but are not necessarily representative of the people. Calls for universal suffrage have so far been ignored.
Hong Kong's chief executive, Donald Tsang, is reasonably popular and would probably be elected by direct franchise. But there are fears in Beijing of the precedent such a franchise might set. Increasingly reliant on access to China's vast markets, few in Hong Kong appear willing to risk alienating Beijing.
"Some either don't want to be seen to be offending the chief executive or trampling on the toes of the central government," Ms Chan said this week, explaining her decision.
Is Hong Kong's economic relationship with China silencing democracy? Is the democratic promise of capitalism no more than a lie? In the 20th century, capitalism was universally associated with democracy. Friedrich Hayek's famous book, The Road to Serfdom, insisted that capitalism and freedom were intertwined. Abandon it, he warned, and centralised socialism would be the result. In Hayek's day doctrinaire socialism cast a dark shadow over the West. Stalin's international socialism and Hitler's national socialism threatened to snuff out the lights of freedom forever.
The collapse of communism led to the fallacy of the end of history; the proposition that the good guys had won and that the world was safe for freedom, capitalism and democracy.
The events of 9/11 put paid to that myth. Together with the West's dysfunctional relationship with the world's largely Muslim oil-producing countries, capitalism's dependence will dominate our age. Running it a close second is the realisation that capitalism does not require democracy to survive.
A contrast between India and China is instructive and not a little disturbing. The absence of property rights and democratic process in China has given entrepreneurs and industrialists tremendous freedom to build, to do business and to make money. The frantic rise of megatropolises in Shanghai, Shenzen and many other cities are awesome reminders of what untrammelled capitalism can do in a short space of time. But what problems is this creating for the future? Coal-powered electricity stations - not to mention tens of thousands of diesel generators - erected to feed China's insatiable appetite for energy are making the air quality increasingly hazardous. Rapid urbanisation is forcing the careless dispossession of peasants of their only asset, their land. And so vast are the cities created by this urbanisation that only a few decades ago futurologists would have dismissed the idea of them as a pipe dream. Already in Shanghai, urban planners are predicting that its population of skyscrapers will rise from 4,000 to 8,000, some so close that residents of apartments on the same floor of adjacent blocks could almost reach out and shake hands. This urbanised prosperity is not spreading to the country, where most Chinese still live.
The virtue of a democracy is that it gives stakeholders a say on how capitalism is implemented and evolves. In Europe, capitalism survived the great depression in those countries where democracy was strongest, such as Britain. It did so by acting as a signalling mechanism for the disaffected, prompting those in power to adjust their policy mix accordingly. The result was that most were appeased.
In Germany and Russia, where democratic traditions were weakest, those signals weren't picked up and the weaknesses of capitalism led to its collapse and far worse. At the turn of this century, China is experiencing the same kind of rapid industrialisation as Germany and Russia 100 years ago.
The contrast with India is different. China's economic growth rate has for the past decade far outstripped that of India, although the latter is catching up. But India's more gradual progress may be its strength. As frustrating as Indian bureaucracy and political decision-making can be in the short term, it makes Indian capitalism more stable in the long run.
Not that the relationship between capitalism and democracy is perfect in the West. In the Republic, rising prosperity and opportunity causes more and more people to look on democratic engagement as a distraction from money making.
Robert Puttnam warns us that fewer of us are joining political parties. This is a trend we should worry about: if the world economy goes pear-shaped in coming decades, then the quality of those guarding our democracy may matter a great deal. There are good reasons for supporting a well-managed process of globalisation, but a naïve belief that it will spread democracy isn't one of them. While capitalism can help, it can also hinder democracy. In the long run, democracy relies on the values and vigilance of an active citizenry. On the other hand, the spread of democracy might just save capitalism from becoming in this century the kind of threat to humanity that socialism was in the previous one.
